California's New School Finance System
On July 1, 2013, Governor Jerry Brown signed into law the new Local Control Funding Formula (LCFF), which significantly changes how California funds its K-12 schools and gives school districts more authority over how the money will be spent.
The new funding formula replaces the old system of “revenue-limits”—general-purpose funding from the state, which was based on complex historical formulas and made up approximately 70% of a district’s budget—with a per-student base grant that varies by grade span.
The transition to the new formula began with the 2013-14 school year, with full implementation of the new funding formula expected to take eight years. Although the majority of school districts will receive more funding under the new formula, districts that were already receiving more funding than what they would get under LCFF are protected by a provision specifying that no district will receive less state aid than it received in 2012-13.
At full implementation, districts will receive 20% more money for each high-needs student, based on unduplicated counts of low-income, English learner, and foster youth students, and even more for schools with large concentrations of these populations. This additional funding for high-needs students replaces most of the state’s categorical programs—funds the state previously provided to school districts for specific purposes such as summer school programs, school safety, or helping certain student populations.
Until the new LCFF is fully funded, districts will receive roughly the same amount of funding they received in 2012-13, plus an increasing amount during each year to bridge the gap between current funding levels and the new LCFF target levels.
Unlike categorical programs that come with restrictions on how the money can be spent, schools will have broad discretion over how they use the base grants they receive under the new system. The extra money they receive for their high-needs students must (as written in the law) “increase or improve services for unduplicated pupils in proportion to the increase in funds apportioned.”
In November 2014, the State Board of Education adopted regulations advising districts on how much money they must spend each year improving programs and services for high-needs students and when that money can be used to fund schoolwide and districtwide programs.
Under the new funding formula, school districts are subject to new rules for transparency and accountability, which include creating—with input from parents and the community—and adopting a Local Control Accountability Plan (LCAP) that lays out how the district will spend the funds and its goals for improving student outcomes according to eight priorities that the Legislature set. The priorities include academic achievement, student engagement, parent involvement, and the successful implementation of new academic standards. Districts that fail to meet their goals and improve student outcomes will receive help through a new system of interventions.
The State Board of Education and the California Department of Education are still working on developing new systems for identifying whether schools need help and for providing that support through a new agency, the California Collaborative for Educational Excellence. Evaluation rubrics will set statewide targets for districts and schools on metrics that will include rates of student graduation, reclassification of English learners, and absences and suspensions. The rubrics will lay out a structure and process for providing assistance to LEAs that consistently fail to meet goals for improvement. The State Board must approve the rubrics by Oct. 1, 2015.
For a more detailed explanation of the new system and additional resources, please see:
California Department of Education’s LCFF web page
EdSource's LCFF guide, with updates on the implementation of the funding system
The State Board of Education's LCFF resource website
A summary of K-12 funding in the 2013-14 budget from the Department of Finance
What this means for the reports on Ed-Data
You are currently viewing the Classic Ed-Data website. The financial reports available here are not affected by LCFF. New financial reports for 2013-14 are available on the new Ed-Data.org website. Under LCFF, school districts will continue to report their financial data to the state using the Standardized Account Code Structure (SACS) reporting format. However, what was previously reported as "Revenue limit" sources of funding will now be called "LCFF sources."
More changes ahead
In addition to the new finance system, California has adopted a new set of academic standards, known as the Common Core, and is also changing its student testing and school accountability systems. For more about these changes, please see: Changes to California's K-12 Education System.
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